Retiring early w/ pension to save my sanity!

[MichaelB]

Looking back at the first two posts, it looks like drumgal will have healthcare coverage, and her pension would not change significantly by staying on a few more months.

I will have health insurance when I retire. Still trying to decide between high deductible (no monthly payment, $2500 deductible with a $2000 yearly account set up by the county to help cover- rolls over every year) or to go with my present subsidized plan (about $230 a month which includes dental).

I will have a pension approx 75% of my present income, minus a penalty because I am not yet 60 (57 in February).

One thing she would gain by staying on a few more months would be the opportunity to build an emergency fund. While sticking around might be stressful, not having enough money to replace the furnace or repair will also lead to lots of anxiety. Something to keep in mind.

 

[Teacher Terry]

I am not sure about the county but with the state here it makes a difference in what you pay each month for her health insurance. So this is worth checking into in case the premium is based on the # of years.

 

[pb4uski]

Just wondering... is there another role you could take on that might be more patron focused and that you could either avoid altogether or reduce interactions with this toxic boss?

If not and if there is no particular magic to being there 20 years vs 19 2/3 years then by all means get yourself out of that horrible situation and take a chance.

How much vacation do you have coming? Can you use vacation to cover a good portion of the 4 months? (In other words, stop working and go on vacation and have your last day of vacation be your retirement date so if you had a month of vacation coming you would only need to work an additional 3 months rather than 4 months)

 

[Another Reader]

Looking back at the first two posts, it looks like drumgal will have healthcare coverage, and her pension would not change significantly by staying on a few more months.





One thing she would gain by staying on a few more months would be the opportunity to build an emergency fund. While sticking around might be stressful, not having enough money to replace the furnace or repair will also lead to lots of anxiety. Something to keep in mind.

She loses $30 a month in additional health insurance premium and $60 in pension per one of her posts. Not a lot to many of us, but significant to her.

 

[Sarah S]

I wonder too how the difference in health insurance premium is determined? It may be a percentage so the dollar differential may widen. There are so many uncertainties in the health insurance market that the plan costs could very well increase a lot

I sympathize very much with the need to escape a toxic situation but medical costs are so unpredictable

 

[Teacher Terry]

I doubt she would lose 60/month for 4 months of work. PERS pro-rates by the month so I think that is incorrect.

 

[Another Reader]

I doubt she would lose 60/month for 4 months of work. PERS pro-rates by the month so I think that is incorrect.

That was her statement.

 

[MichaelB]

I believe her statements were 10 months of additional work would lead to an increase in pension of $60 and a reduction in her health care contribution of $30, net $90 to her.

If I retire before 20-year mark, I will have to pay $30 more a month towards my premium. (I am exploring the possibility of a high deductible plan w/ NO monthly payment.) My current plan offers a subsidy towards health insurance, and my balance w/ dental would be a total of $230 a month. Is it worth it to me to wait another 10 months to save $30 a month? At this point I would say "no." Would you disagree? Thanks for your input! I'm reading everything here!

I would have to pay $30 a month more for insurance and would take a pension cut of approx $60 dollars per month. This is a good point! Some would say, "It's only $100 a month." Others might say, WOW! That's $1200 (or so) a year!

I am considering staying until November, although it would be extremely hard, particularly after having already given my notice. I appreciate your input! Thank you!

 

[drumgal]

Drumgal , I think a lot of people are concerned for you because we have seen other members try the retiring on a shoestring and it did not work . They all returned to work.The only thing I would suggest is staying the extra few months especially if it is tied into medical insurance . That is a biggie especially as you age .

I will have medical and dental insurance when I retire. That's the beauty of it! I have a very reasonable deductible for my health insurance after which my visits are covered at 100% Dental will cost me $59 a month.That's it!

I'm not retiring COMPLETELY! I have already accepted a part-time job I can do at home. I have always worked as a professional musician besides.

 

[Another Reader]

Stick it out until November and take the extra $1,080 per year for doing nothing. You can use the six weeks vacation at the end. You should still accrue time for retirement those last 6 weeks (verify, of course). If you take it as a lump sum, a lot more taxes will be taken out that you will have to sort out at tax time.

Have you checked your marriage and divorce dates to make sure you were married for at least 10 years? One day under, and you lose whatever you would have gotten in SS from your ex. Get all your ducks in a row before you commit to a retirement date.

Remember, you could lose those subsidized health insurance benefits. I lost a lot of mine when retirees were dropped from the local government's plan. There will be more of that as agencies look to cut costs. That $1,080 per year would make up for some of the loss.

 

[drumgal]

Just wondering... is there another role you could take on that might be more patron focused and that you could either avoid altogether or reduce interactions with this toxic boss?

If not and if there is no particular magic to being there 20 years vs 19 2/3 years then by all means get yourself out of that horrible situation and take a chance.

How much vacation do you have coming? Can you use vacation to cover a good portion of the 4 months? (In other words, stop working and go on vacation and have your last day of vacation be your retirement date so if you had a month of vacation coming you would only need to work an additional 3 months rather than 4 months)

As long as I am still working I will sock away as much as I can in my deferred comp. (Pre-tax contribution from my paycheck) I am "practicing" my post-retirement budget. So far, no problem! (6 mos and counting) IF I wait until the 20 yr mark I will get another $60 a month on my check. There will be a decrease in retirement penalty for yrs under age 60 (.33% per mo.) I am opting for the high-deductible retirement health plan with NO monthly premium and an added HSA that can be used to (almost) cover the deductible. If I save my vacation time, I will get paid for it when I retire. So far I have 8 weeks saved. (There is a cap, but I haven't reached it yet!) I like your idea though! After I retire, I may roll over the deferred comp $ into a Roth IRA or (?!) and continue to contribute to it from my part-time work.I will save like a madwoman for a few years...making frugal FUN! I can do this.

 

[pb4uski]

If I understand you correctly, 20 years doesn't have any magic compared to 19 2/3 or 19 1/2 years other than the 0.33% per month since your health insurance will not be any different.

One thing to consider is whether two months of retirement benefits is worth 0.66% for the rest of your life... if so then perhaps you can extend your service by using your vacation to extend your service by two months and forgoing two months of retirement benefits in exchange for a 0.66% increase in retirement benefits for life. On the other hand, if you take the vacation pay in cash and start your retiree benefits immediately you can used the vacation pay to bolster your emergency fund.

At this point, you're in the driver's seat... hopefully that will help you dealing with toxic boss for your remaining time.

 

[drumgal]

If I understand you correctly, 20 years doesn't have any magic compared to 19 2/3 or 19 1/2 years other than the 0.33% per month since your health insurance will not be any different.

One thing to consider is whether two months of retirement benefits is worth 0.66% for the rest of your life... if so then perhaps you can extend your service by using your vacation to extend your service by two months and forgoing two months of retirement benefits in exchange for a 0.66% increase in retirement benefits for life. On the other hand, if you take the vacation pay in cash and start your retiree benefits immediately you can used the vacation pay to bolster your emergency fund.

At this point, you're in the driver's seat... hopefully that will help you dealing with toxic boss for your remaining time.

Yes, you're exactly right! It's a tough call, but that's what it boils down to! I'm going to really consider using the vacation time to extend my service. I could leave "early" AND reap the benefits! Thanks again for your take on this. I'm pretty obsessed with figuring this out! Your input really helps.

 

[drumgal]

Stick it out until November and take the extra $1,080 per year for doing nothing. You can use the six weeks vacation at the end. You should still accrue time for retirement those last 6 weeks (verify, of course). If you take it as a lump sum, a lot more taxes will be taken out that you will have to sort out at tax time.

Remember, you could lose those subsidized health insurance benefits. I lost a lot of mine when retirees were dropped from the local government's plan. There will be more of that as agencies look to cut costs. That $1,080 per year would make up for some of the loss.

BOTH great points! Thank you!

 

[drumgal]

Not being short at all. You should be able to tell from their carefully thought-out posts that most people here sympathize with you.

One question: are you posting from a work computer that other staff, IT, etc., can access? We never know who is looking over our cybershoulder....

These posts have meant so much to me, although certain naysayers I find discouraging... *sigh* This post has kept me sane for the last week or so! This is a very stressful time. I appreciate any comments.I'm still figuring this out, so thank you!

I am careful NEVER to look up this thread at work, My boss is just the type that would snoop! Only at home...

 

[2soon2tell]

Drumgal,

I'm sure you have checked but is a transfer to another government department an option?

Whatever you decide to do try not to burn any bridges. You never know when you might have to use them in the future.

JMHO

 

[Pilot2013]

As long as I am still working I will sock away as much as I can in my deferred comp. (Pre-tax contribution from my paycheck)

I would stop this immediately and put toward your cash reserve. That little bit in the last few months won't mean anything to that plan, and you certainly don't need the tax break at that income level.

 

[euro]

After I retire, I may roll over the deferred comp $ into a Roth IRA or (?!) and continue to contribute to it from my part-time work..

you'll need to check carefully what the rules are for your deferred comp plan, they do vary (I have deferred salary too and mine absolutely cannot be rolled into an IRA, but maybe yours is different?). However, you won't be able to roll it directly into a Roth, because Uncle Sam wants to get paid at some point.... Since it is pre-tax money, you will have to roll it into a tIRA and then convert to Roth and pay the appropriate taxes - with your limited income in retirement, this may not be that big of a hit though.

 

[Yarnstormer]

How are you doing? What did you decide?

 

[drumgal]

How are you doing? What did you decide?

Well, I gave my final notice- filled out the paperwork. My boss said nothing on my final review, no 'thanks'- no 'good luck.' Not a decent word, after 20 yrs of loyalty! Ha! I have decided that living with less money is better than living miserably! Have been practicing my AR budget, and finding that life is just fine!(Several months now!) The rest, every penny, in fact, is going to savings. I will continue to save after I leave my job. I understand why some might disagree with me on this early retirement, but all we have is this one life! I need very little to be happy. I have not felt this "alive" in years! Taking charge of my own life and happiness, that is. Just a side note- 3 other employees have decided to leave as well! I think I have started something! I guess I wasn't the only one...Thank you for asking! I was very scared at first, but feeling stronger and confident now!

 

[chris2008]

Thanks for the update. May you enjoy a wonderful ER!
Sometimes the benfit of waiting is not worth it.

 

[Sue J]

I'm glad you updated us. I reread the entire thread.

Just want to say good luck to you. Tracking your expenses and knowing what you need teaches you about how you'll live.

The biggest "unknown" is probably your health care expenses. For us, DH's pension system made huge changes to their health care plans and then dropped spousal coverage so that was a big hit to our expenses, but we were able to absorb it. Another thing to watch out for is if you have a medical event that requires you to cover a large deductible. One year of that is significant, a second year or an ongoing expensive medical issue could be devastating, so have a LARGE emergency fund. Having an HSA will be a big help.

As for the sanity issue, DH didn't hate his job, but he had a couple of years of feeling that he was being targeted by his boss and that his removal was looming. Once it really did happen he was very relieved and felt like a whole new part of life had opened up. He took a while to detach from the stress and appreciate how freeing that felt. Then he learned to play again. Not playing music, like you, but playing like a kid on a sunny Saturday with no school tomorrow!

 

[drumgal]

I would stop this immediately and put toward your cash reserve. That little bit in the last few months won't mean anything to that plan, and you certainly don't need the tax break at that income level.

I appreciate this advice. I will look at this more closely! I will receive a pretty large last check w/ yearly bonus and unused vacation leave. I had planned to have that entire final check deposited there (deferred comp) so it won't be taxed so heavily. It's nothing more than an additional savings account at this point, but it is a tax-deferred contribution from my regular paycheck. I was planning to roll over the funds into another account at some point (undetermined). Any thoughts? Thank you!

 

[drumgal]

I'm glad you updated us. I reread the entire thread.

Just want to say good luck to you. Tracking your expenses and knowing what you need teaches you about how you'll live.

The biggest "unknown" is probably your health care expenses. For us, DH's pension system made huge changes to their health care plans and then dropped spousal coverage so that was a big hit to our expenses, but we were able to absorb it. Another thing to watch out for is if you have a medical event that requires you to cover a large deductible. One year of that is significant, a second year or an ongoing expensive medical issue could be devastating, so have a LARGE emergency fund. Having an HSA will be a big help.

Thank you! I will have pretty good medical coverage with an HSA. I've chosen the high deductible plan, and with the HSA, my max deductible would be $500 a year, if unused the HSA rolls over. This plan, as opposed to paying a monthly premium of $230 which would greatly exceed the $500 a year deductible. Dental is included. I feel pretty good about that. Thank you for your input!

 

[Sue J]

Are you certain that the health plan is an HDHP that qualifies for an HSA? A qualifying HDHP has to have a minimium of $1300 deductible for an individual.

https://en.wikipedia.org/wiki/High-deductible_health_plan

Nevermind, I see you would have a $2500 deductible with $2000 contributed by your employer.